Sustainability-linked loans: how "greenwashing" risk is mitigated in documentation

It is increasingly common for sustainability-linked loan (SLL) documentation to include certain protective provisions that are intended to ensure that lenders do not find themselves party to an SLL that is flawed or deficient in some way. The first example is the inclusion of a “declassification” provision which describes the particular circumstances when a loan will cease to be classified as an SLL and, in turn, the parties agree to cease to publicise it as such. The second example is the “rendez-vous” clause which recognises the coming together of the parties to engage in a discussion with a view to addressing changes that affect the borrower or its business that render one or more of the borrower’s key performance indicators/ sustainability performance targets as no longer being fit for purpose.

To find out more about the declassification provision and rendez-vous clause, please download the below PDF article.